Newcrest Mining Update

Submitted by Craig Strzelecki on 1 May, 2007 - 18:03

Newcrest Mining (NCM) have a Neutral 2 broker call and a share price target of $26 from market analyst UBS. Telfer in flood, Cadia in drought: March quarter report. Q3 gold production was 390 koz vs UBSe 381koz. Telfer production was as expected but Cadia, Cracow and Ridgeway all exceeded expectations. Gold production guidance has changed for FY07, decreased to 620koz from 675-700koz previously for Telfer due to the onging impact of the March rains, and +10koz at Kencana and +10koz at Ridgeway. Copper production guidance +2kt at Ridgeway and -4kt at Telfer. Higher copper prices offset production decreases: Overall they have reduced our production estimates for FY07 in line with todays' guidance, however this was more than offset by the positive impact of the rising copper price and the resulting positive quotational period pricing adjustments. The analyst's FY07 estimate has risen 24% to $75m post the hedge restructure adjustment. Watch water situation at CVO: Water supplies at Cadia are at critically low levels and if there is no rain in May, Cadia production may be impacted. They have assumed production continues as previously anticipated, but note that Cadia is expected to contribute ~18% of production in 2008. The sharemarket analyst's valuation for Newcrest is $9.87. Their longer term view remains to look to 2008 and beyond where higher production and lower hedging should lead to greater cashflow, and CVO and Kencana offer further growth potential. Our $26 price target is set at a global average p/npv.

Newcrest Mining Limited is listed on the Australian Stock Exchange (ASX) under stock code NCM. You can view their investor website here. NCM was listed on the ASX on 4 June, 1987 as Newmont Mining. Newcrest Mining Limited was formed in 1990 from the merger of Newmont Australia Limited and BHP Gold Limited. Newcrest and its predecessors have a strong history of successfully exploring, developing and operating gold mines, predominately in Australia. Ian Smith is the CEO of Newcrest Mining and Don Mercer the Chairman. Current operations are: Ridgeway, Cadia Valley, Telfer, Toguraci and Cracow. They have current explorations in the Cadia District, Gosowong, Telfer District, Cracow and Ashburton, WA. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade NCM. Check your charts and good luck with your share trading!